Blog

Reach customers: 1st step to e-commerce success

If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods.

—Ralph Waldo Emerson: Essayist. Lecturer. Poet. NOT A BUSINESSMAN.

In an earlier post on our blog, I laid out a simple framework for success in e-commerce: findcustomers, servecustomers and keepthose customers coming back. In this post, let’s take a detailed look at the first step: finding customers.

As a bank robber extraordinaire, Willie Sutton said when asked why he robbed banks: “That’s where the money is.” In our line of work, customers are where the money is. Finding customers, or having them find you, is absolutely essential.

Many small businesses don’t start out thinking about this explicitly, relying on Emerson’s idea that a good product mystically draws customers. In reality, this just isn’t the case, especially in ecommerce. You are trying to find your customers on the internet, and fighting for their attention against all of your competitors and against the attention-grabbing universe of hilarious cat pictures. When they get tired of looking at those, your customers can always go to Walmart. The process of customer acquisition doesn’t just happen on its own.

customer acquisition funnel

Many models of this process are available, for example the simple model and the complicated one. The main point is: your customers have to know you exist and have a product that fits their needs or wants, they have to make a decision to buy the product, and then make the purchase.

Every road bump in this process costs you customers and money. From conversations with customers, I estimate that typical conversion rates for an ecommerce business with a great product in a booming market with an educated audience and a well-developed marketing strategy are around 1-2%. It means that for every one hundred customers who visit the site, only one or two leave their money. Keep in mind that every hundred costs money, whether in web hosting costs, pay-per-clicks, or simply in the time you took to create the content to give them.

This is the same battle that every brick and mortar store faces daily. The only way to win is to constantly work in order to understand where the obstacles are, to measure your funnel, and to widen it at crucial points.

The good thing about ecommerce is that you have accessible tools to understand aspects of customer behavior that cost traditional businesses a fortune to measure. Just for comparison, a supermarket chain can spend tens and hundreds of thousands of dollars videotaping customer shopping patterns from every angle, testing various store configurations to maximize revenue. However, it has no way of telling how many people walked by the store without turning in, and why. But an ecommerce business can affordably and continuously gain insight into all this and more. Here’s how: